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CIRCULAR No

CIRCULAR No. 81/1999/TT-BTC OF JUNE 30, 1999 GUIDING A NUMBER OF MEASURES TO ENCOURAGE FOREIGN DIRECT INVESTMENT, REGARDING LAND RENTALS UNDER THE PRIME MINISTER�S DECISION No. 53/1999/QD-TTg OF MARCH 26, 1999

Pursuant to the Law on Foreign Investment in Vietnam of November 23, 1996;

Pursuant to the Government�s Decree No.12/CP of February 18, 1997 detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Article 10 and Clause 4, Article 11 of the Prime Minister�s Decision No.53/1999/QD-TTg of March 26, 1999 on a number of measures to encourage foreign direct investment;

Pursuant to the Finance Minister�s Decision No. 179/1998/QD-BTC of February 24, 1998 promulgating the Regulation on land, water surface and sea surface rents applicable to foreign investment forms in Vietnam.

The Ministry of Finance hereby guides the implementation of a number of provisions on land-rental preferences, reduction and exemption for foreign direct investment projects in Vietnam as follows:

I. OBJECTS AND SCOPE OF APPLICATION

Joint-venture enterprises, enterprises with 100% foreign capital and foreign parties to business cooperation contracts under the Law on Foreign Investment in Vietnam (hereafter referred collectively to as foreign-invested enterprises), which are leased land by the State of the Socialist Republic of Vietnam shall enjoy land-rental preferences, reduction or exemption as follows:

- Foreign- invested enterprises, which meet with difficulties in the implementation of their projects and thereby have to halt the construction or operation, shall be entitled to land-rental reduction or exemption during the time of such halt;

- Foreign- invested enterprises shall be entitled to the lowest rent rate when renting land for investment in the construction of workers� dwelling houses and infrastructure projects (educational, training, medical establishments�) outsides fences of industrial parks and such foreign-invested enterprises.

II. ON LAND-RENTAL REDUCTION AND EXEMPTION FOR PROJECTS WITH CONSTRUCTION OR OPERATION BEING HALTED

1. Land-rental reduction/exemption levels:

1.1. A foreign-invested enterprise, which meets with difficulties and thereby has to halt the construction of a project, shall be exempt from the rental on the land area rented for the construction of the project during the period of construction halt;

1.2. A foreign-invested enterprise being engaged in production and/or business, which meets with difficulties and thereby has to halt its operation, shall be exempt from the land-rental during the period of operation halt;

1.3. During the period of construction or operation halt, if a foreign-invested enterprise uses part of the rented land for production and/or business activities, it shall enjoy 50% reduction of the rental payable for such land area.

2. Procedures for and competence to decide land-rental exemption/reduction

2.1. A foreign-invested enterprise, which meets with difficulties in the implementation of a project and thereby has to halt the construction or operation, shall have to compile and submit a dossier of application for land-rental reduction or exemption to the Tax Department of the province or centrally-run city where such enterprise registers the payment of tax. Such a dossier shall include:

- A written request for land-rental reduction or exemption, which clearly states the reason(s) for and the duration of halting the construction or operation;

- A written approval by the investment licensing agency (the Ministry of Planning and Investment or the People�s Committee of the province or centrally-run city) of the duration of halting the construction or operation of the concerned foreign-invested enterprise.

2.2. The heads of the Tax Departments of the provinces and centrally-run cities shall have to inspect, determine and effect the land-rental reduction or exemption corresponding to the actual duration of halting the construction or operation of the foreign-invested enterprises and within the duration already approved by the investment licensing agencies as prescribed in this Circular.

3. If a foreign-invested enterprise has paid the land rental in lump-sum for many years, the land-rental reduction/exemption amount according to this Circular shall be deducted into the land rental amount payable for the subsequent period; if the land-lease term has expired, such enterprise shall be refunded the land-rental reduction/exemption amount by the State budget.

4. A foreign-invested enterprise, which is permitted by the investment licensing agency to halt the construction or operation before this Circular takes effect, shall enjoy the land-rental reduction/exemption as prescribed in Point 1, this Section in the halting duration under the written approval by the investment licensing agency.

III. LAND-RENT RATES FOR INVESTMENT IN THE CONSTRUCTION OF WORKERS� DWELLING HOUSES AND INFRASTRUCTURE PROJECTS (EDUCATIONAL, TRAINING, MEDICAL ESTABLISHMENTS�) OUTSIDES THE FENCES OF INDUSTRIAL PARKS AND FOREIGN-INVESTED ENTERPRISES

1. According to the Regulation on land, water surface and sea surface rents applicable to foreign investment forms in Vietnam, issued together with the Finance Minister�s Decision No.179/1998/QD-BTC of February 24, 1998, the land-rent unit rate for urban land (Clause 1, Article 3) and non-urban land (Clause 2, Article 3) shall be determined as follows:

Land-rent rate (USD/m2/year) = The minimum rent rate set for each group of urban areas and non-urban land (USD/m2/year) x The location coefficient x The infrastructure coefficient x The business line coefficient

The coefficients shall be applied as follows:

- The location coefficient has 4 levels (1 or 2; 2.5; 3), which shall apply depending on the location of the land lot;

- The infrastructure coefficient has 4 levels (1 or 1.4; 1.7; 2) for urban land and 3 levels (1 or 1.5; 2) for non-urban land, which shall apply depending on the infrastructure conditions of the rented land lot;

- The business line coefficient has 3 levels (1 or 1.5 and 2) for urban land and 1 level (1) for non-urban land, which shall apply depending on the production/business lines of the project.

2. The land-rent unit rate applied to foreign-invested enterprises, which are leased land by the competent State agencies for the construction of workers� dwelling houses, schools, hospitals and other infrastructure projects outsides the fences of industrial parks and foreign-invested enterprises, which are entitled to the lowest land-rent rate, shall be the minimum rent rate set for each group of urban areas, regarding the urban land in Point 1.1, Clause 1; and for each category of communes, regarding the non-urban land in Points 2.1 and 2.2, Clause 2, Article 3 of the Regulation on land, water surface and sea surface rents applicable to foreign investment forms in Vietnam, issued together with the Finance Minister�s Decision No.179/1998/QD-BTC of February 24, 1998, without applying coefficients (the location, infrastructure and business line coefficients).

3. The land-rent rates stipulated in Point 2 of this Section shall be decided by the People�s Committees of the provinces and centrally-run cities at the proposal of the provincial/municipal Finance-Pricing Departments.

Basing themselves on the already decided rent rates, the provincial/municipal Land Administrations shall inscribe them in the land-lease contracts according to the provisions of Article 8 of the Government�s Decree No.11/CP of January 24, 1995 detailing the implementation of the Ordinance on the Rights and Obligations of Foreign Organizations Renting Land in Vietnam.

This Circular takes effect as from July 1st, 1999.

In the course of implementation, if any problem arises, it should be promptly reported to the Ministry of Finance for consideration and settlement.

For the Minister of Finance

Vice Minister
LE THI BANG TAM